9/28/2009 @ 5:24PM

Seeing Red On Cap And Trade

Energy and environmental policy returns to the spotlight on Capitol Hill on Wednesday, when Sens. Barbara Boxer, D-Calif., and John Kerry, D-Mass., are expected to introduce legislation to curb climate change.

It’s the Senate’s version of a bill the House of Representatives passed in June known as “Waxman-Markey” for its primary sponsors. The House measure would establish a so-called cap-and-trade system to limit greenhouse gas emissions.

All the talk of energy and the environment in Washington means critics of climate change legislation are getting increasingly vocal. Among them is Don Blankenship, chairman and chief executive of Richmond, Va.-based
Massey Energy Company
, the largest coal producer in central Appalachia.

“I don’t know how we let the enviros and the humanitarians off the hook, that they continue to stymie the development of other countries,” he says. “You’ve got people dying of preventable disease every day, and yet we’re getting ready to spend billions of dollars on climate change.”

Blankenship speaks in a soft drawl, but he staunchly opposes much of the current U.S. government’s policies. He worries that the country is stuck in a “reg-cession,” in which over-regulation will hinder the recovery. (See “How Congress Will Steal The Recovery.”) He thinks U.S. trade policy is killing American blue-collar jobs, although he sees China as a booming market for Appalachian coal. He makes no apologies for what may be perceived as political incorrectness. (“Turn on more lights, burn more coal,” he says, half-jokingly, of the dimly lit lobby in Forbes’ Washington office.)

Forbes: Tell me about Waxman-Markey.

Blankenship: Obviously, I’m totally opposed to Waxman-Markey. I think it’s just another step in the reg-cession, and it makes free trade very difficult because other countries, particularly Asia, are going to use coal as their primary energy source. We’re just going to fall behind if we continue to impede the use of coal, or drive up the price of using coal or of producing domestic energy.

Is there any merit to environmental groups’ argument that there should be limits on carbon emissions?

I think it’s all a hoax and a Ponzi scheme. I can’t find any logic to the fact that the climate is actually changing any more because of man than it would without man. More so, though, the math simply doesn’t work. If you did away with the entire U.S. carbon emissions, the Chinese and the Asian community would replace it in just about three years.

Do you think the government is doing anything right in terms of environmental and energy policy?

They’re right about their ideal of improving miner safety, improving miner health and improving the environment. The flaw in achieving their objectives is [that] they don’t do cost-benefit ratios and figure out how they can make the biggest impact for the least cost, and how they can keep the U.S. competitive in the process.

Of all the things being proposed, what worries you the most?

The CO2 mandates coming out of EPA. That’s the scary part. On a micro basis I’ve seen specific steel plants and coke ovens go down in the U.S. because they couldn’t quite make U.S. standards, and then be moved to South America or Asia where there are no standards. And then [to] have people declare victory that they’d cleaned up the world’s atmosphere is pretty crazy.

Some people say cap-and-trade is bad for the coal industry, others argue that the industry gets off easy relative to others.

The industry, whether it’s utilities or whether it’s coal, is being bought off. They’re all looking at maintaining their piece of the pie through allowances and other favors rather than looking at how big the pie’s going to be. If you drive up electricity prices 30% or 100%, depending on which studies you believe, you’re going to get less electricity use, and key industries like aluminum and chemicals and so forth just get destroyed. I think the business community is short-sighted by seeking particular favors in this bill as opposed to opposing them up front.

Do you think it’s going to pass?

I don’t think so. It’s going to be tough to get past health care this year, and then next year the election will scare people. [Members of Congress] will all say that they don’t want to pass it during an election year, which sort of says that they’re not passing what they believe the American public wants.

It’s going to cause people to have egg on their face because it’s not do-able. CCS [carbon capture and sequestration] has not ever been commercially done. To pass laws that dictate that 70% of the carbon emissions must be reduced in 20 years is insane because nobody even knows that they can do it. None of it matters because of the Asian use of coal and because there’s really no proof of global warming. So to me, it’s a dilution of public attention from the one point [sic] trillion dollar deficit. Somehow they’ve managed to keep the public’s mind off real issues.

There are always concerns about miner safety and clean water issues. Two years ago Forbes ran a story placing coal-centric West Virginia at the bottom of the list of greenest states. Are you doing anything to turn around this image of the coal industry?

We are trying to. You’ve constantly got hyperbole in the press, and you’ve got the government trying, because of their belief in climate change, to drive up the costs and increase the bad press, so it’s really hard to overcome it.

I find it odd that the environmental movement says that the area [West Virginia] has to be protected as one of the most pristine diversified forests in the world. We’ve been mining there for 110 years, and if we didn’t destroy it under the previous laws, we certainly aren’t going to destroy it under the current ones.

What is not being said about the coal industry or Massey in the press?

That the only way this country can be energy independent or actually even have homeland security is to turn to coal. We have more coal than the Middle East has in oil. Coal can create the wealth in this country that funds the Manhattan Project on the next generation of energy. But as long as we’re wasting such huge amounts of money on renewables and nonsense–like CCS [carbon capture and sequestration] or whatever–we’re not going to have those funds.

But we have a finite supply of coal. Should we not be moving in some direction toward renewables?

You should. You’ve probably got about 100 years to do it. The way you should be doing that is not trying to apply to commercial development things that haven’t been figured out yet. You’re better off spending the money on things that could offer a true answer.

Anything else you wanted to say?

Probably the biggest thing that you would find us in disagreement with is trade policy. The problem we’ve got in this country is that if you pay $40 an hour and try to compete against $5 labor, and you’ve got these EPA rules and these regulations and the other countries don’t, that we keep bleeding our prosperity. I think we’ve now reached a point that we’ve disproven this service economy.